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The share price of TENAGA is RM100 per share, while the call option is RM10 per contract with the exercise price of RM105. When an

The share price of TENAGA is RM100 per share, while the call option is RM10 per contract with the exercise price of RM105. When an investor buys the call option, he/she is entitled to purchase TENAGA share at RM105 per share. Ahmad has only RM100 to invest and believes that the share price is likely to increase significantly in the near future. What are his profit and the rate of return of his investment if he invests all his money in :

1. shares?

2. options?

3. Compare the leverage level of both of the investment as in (i) and (ii).

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